Candidate changes course after conflict of interest accusations

By Joshua Fechter

April 17, 2014

Ryan Sitton is co-founder and CEO of PinnacleAIS and a Republican candidate for Railroad Commissioner

Ryan Sitton is co-founder and CEO of PinnacleAIS and a Republican...

AUSTIN - Following weeks of criticism from a political rival, a Republican candidate for the Texas Railroad Commission said Thursday that if elected he would step down from his oil and gas firm to avoid a potential conflict of interest.

The commission is the state agency that regulates oil and gas and Ryan Sitton, co-founder and chief executive officer of energy firm PinnacleAIS, previously said he would keep an ownership stake in the company if elected and would not release a list of clients.

Sitton reversed his position in a statement saying that if elected to the statewide post he would not engage with the business, would step down as CEO and put his interests into a blind trust.

"I earnestly believe we need a railroad commissioner who understands the energy industry and knows what they are doing," Sitton said. "I also understand that to do the job effectively, I can't have people questioning my motives."

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Sitton earlier had said "there is no conflict of interest. Our company does zero work that is regulated by the Railroad Commission. We've never had a contested case go before the commission. We've never had any interaction with the Railroad Commission."

But his stance was criticized by his Republican opponent, former Rep. Wayne Christian of Center, who raised questions about a conflict of interest.

The two will square off in a May 27 GOP primary runoff.

"It's disappointing that career politicians like Wayne Christian play these political games, especially since he has a concrete record of self-dealing and lining his own pockets at taxpayers' expense," Sitton said.

Christian campaign manager Travis McCormick said Sitton is now copping to a conflict of interest that he previously denied existed.

"In a last-ditch effort to try and come from behind, he is proposing a scheme to have a blind trust," McCormick said in an email.

McCormick said Sitton would still profit from a company "that has business in front of him as an elected official," even in a blind trust.

The tea party group Grassroots America - We The People PAC, endorsed Christian and asked Sitton to release his client list.

Priority: public interest

"Mr. Sitton needs to understand one thing - he's asking the people of Texas to hire him for a job via the electoral process," JoAnn Fleming, the PAC's director, said in a news release. "That means the public's interest must now take priority over his company's interest and the private interests of his clients. If he doesn't understand that, he's not ready for public office in Texas."

Sitton said that regardless of the election outcome, he would not release his client list: "There's no need to do that. I won't have any engagement with those clients or with the business."

He also said he would see no regular income from the company while serving as railroad commissioner, which pays more than $175,000 annually.

But Sitton would still have some financial stake in oil and gas holdings in the very industry he will regulate, said Craig McDonald, director of the watchdog group Texans for Public Justice.

"Just because it's sitting in a blind trust doesn't mean it will eliminate the conflict," McDonald said.

Trust not totally blind

A blind trust allows a third party to control investments and assets without the beneficiary having knowledge of those assets, said Tom "Smitty" Smith of Public Citizen, but doesn't necessarily mean beneficiaries can't have input.

"It doesn't really keep him from calling up his trust officer and saying, 'Hey, can you make this change?' " Smith said.

Sitton already faced an uphill climb to the GOP nomination before this "self-inflicted" wound, said Mark Jones, political scientist at Rice University. Sitton placed second behind Christian in the four-way GOP primary.

Jones said it doesn't help that skepticism of crony capitalism is rooted in the Republican base, who might feel that oil and gas companies would seek out Sitton's company in the hopes that he would give them a leg up over competitors.

"The damage has been done, but had he not done this, it would have raised the question of why he was even continuing to run," Jones said.

The winner of the GOP primary will face Democrat Steve Brown in the general election in November.